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Morningstar | Boston Scientific's Pipeline and Product Portfolio Solidify Its Narrow Economic Moat

Boston Scientific has regained its footing as one of three major cardiac device makers and left the acquisition-related and operational mishaps of earlier management teams behind. Although Boston is not necessarily beating Medtronic to market with new innovation, the firm remains a tough competitor. After cleaning up internal cultural issues that sometimes led to unforced errors on Boston's part, CEO Michael Mahoney has focused the firm on introducing meaningful innovation and leveraged Boston's historically formidable sales and marketing resources.Mahoney has shifted Boston away from its earlier reliance on the traditional cardiac rhythm management and stent businesses, which are largely mature at this point, to focus on new technologies. Boston has tapped into novel platforms, including its Eluvia stent for peripheral use, subcutaneous implantable defibrillator, and left atrial appendage closure and atrial fibrillation products. Even in the markets facing slower growth, Boston has bolstered its significant presence by consistently introducing new products. For example, Boston has maintained its strong position in drug-coated coronary stents and is developing some transcatheter mitral valve repair technologies--building on Boston's footprint in the cardiac and vascular markets. Despite trailing Medtronic on cardiac rhythm management, Boston remains in the game there with recent launches of comparable MRI-safe devices and quadripolar lead. We remain favorable about Boston's efforts to return to the transcatheter aortic valve market with its Lotus device, launch its new Acurate Neo TAVR product, and the addition of the male urology portfolio from American Medical Systems, which we have long viewed as the moatiest part of AMS' business. The big question is whether Boston's wide-ranging presence across device categories will be enough to maintain its position, especially as other competitors (including Medtronic, Stryker, and Abbott) seek further consolidation in order to solidify their place as hospital vendors. We would not be surprised if competitive medical technology companies may be eyeing Boston.